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Government won't pay for strike, ordinary South Africans will
Higher wage bill means diversion of funds from crucial government departments like education and health
High labour costs leave South Africa behind in global economic competition





As the Public Sector Strike continues without an end in sight, it is time for the South African government to take stock of the real costs both in terms of immediate impact and the wider implications, for we are now at a crossroads for the future of our country. For there is really only one victim here: the people of South Africa who, in a variety of ways that shall be felt over the immediate and long-term, are ultimately going to pay and suffer because of the refusal of the unions to negotiate and the inability of the government to competently manage labour relations in this country.

The ultimate costs of this strike shall be borne by the people of South Africa, not the government. The salient question is quite simply, where shall the government get the money for whatever settlement is reached?

The fiscus is already strained and government reserves are empty, the budget overextended. It shall have to be sourced elsewhere, which means, inevitably, sourcing money from other budget allocations that actually endeavour to provide South Africans with the most basic prerequisites that each citizen is not only entitled to, but deserve.

No doubt many departments and programmes shall be hard-hit, but we need only consider a few. What will the implications be for the national education department and its budget? Every Rand diverted to foot the Public Service salary bill shall mean that a child does not receive a textbook, that a much needed library somewhere is not built.

What about the health department? Every Rand diverted to foot the Public Service bill shall mean that there is not enough money to give life-saving anteretrovirals to an HIV-positive patient, that a hospital cannot afford new equipment for its surgery.

Indeed, the very ability of those departments to employ further people shall be hampered. A higher wage bill shall mean departments have reduced ability to employ more people and indeed may even be forced to retrench people in order to pay people higher salaries. Thus, the strike offers only questionable protection to those already employed and nothing for those who are not.

And so it goes. The effort to improve life for all South Africans, especially the poor, shall be compromised for a generation and structural inequality entrenched. What then of the vital mission of making South Africa a more just, equitable society? We cannot do that if government and the unions cripple people before they have already started the race.

There is also a second, wider implication, relating to the first in a complicated but important way. That is the maintenance of the South African economy and ensuring it remains financially viable in a global climate that is unsympathetic to the slightest hint of being able to compete or investor undesirability. For, if we cannot ensure that the long-term essentials of our economy are sound, how can we ever expect to be able to increase job-creation and allow for the expansion of economic opportunities to all South Africans?

South African Reserve Bank figures indicate that the wage bill for the public sector has been increased by, on average, 6,5% above the inflation rate for every year for the past eight years. Indeed, the wage bill increased by 12,1% in 2008 and 18,7% in 2009. South Africa's unemployment rate is now at 25,3%.

Global investors have watched this strike with great concern. Not only are our labour costs accelerating, our government has also broadcast that it cannot negotiate with our labour market or indeed control it in any way.

This has two implications. The first is that we are doing nothing to attract business globally because we cannot convince investors why they should invest with us. Our mining sector is the most powerful example of this. A resource with an estimated $2,5 trillion in reserves, investment in that sector has declined significantly in the last decade despite a global increase in investment in mining.

The fact is we cannot compete with major international players in terms of what we can offer in terms of labour costs. We are currently trying to join with the BRIC countries. Indeed, President Zuma felt this was so important, he even went to China to lobby for our inclusion. And yet, our labour costs are significantly higher than those of the BRIC countries.
It is precisely because of their lower labour bills that those countries have been able to compete and grow economically at accelerated rates, which is precisely why they have come together as mobile, 21st century developing economies attractive to new investors looking for new markets.

Currently, we do not fulfil their criteria. And the reasons for that have consequences for South Africans. If we continue to raise the price of labour, led by the marker of the public sector wages, then we shall battle to convince international players to invest in us as they have done in the BRIC countries. And then how can we expect our economy to expand? And without an expanding economy, how shall we ever have job creation in this country?

South Africa has come to a standstill with the strike. That standstill though is not just for a couple of weeks. It is for a generation of South Africans who shall, in ways direct and indirect, be forced to pay.